The collapse of ISG will cost the Ministry of Justice (MoJ) an estimated £300m on its new prisons programme, and will have an even bigger impact on fire-safety remediation work.
At a hearing before the House of Commons Public Accounts Committee yesterday (27 January), senior civil servants detailed the impact of the main contractor going out of business last September.
ISG was delivering around 17 per cent of the government’s 20,000 extra prison places under its expansion programme, amounting to 3,600 places across 13 different sites, including HMP Guys Marsh in Dorset (pictured).
HM Prison and Probation Service (HMPPS) executive director Jim Barton said: “We’re in the process with commercial colleagues of looking to re-tender contracts across those 13 projects. We’re doing that in as speedy a way as we can while keeping a clear eye on value for money, but we expect it will have a significant impact on both cost […] and delays.”
The current estimate is around £300m, he said. The figure was included in information supplied to the National Audit Office (NAO) last year, he said.
The NAO predicted that the total cost overrun on the expansion programme would be between £9.4bn-£10.1bn.
“Some projects could be delayed by up to about a year,” Barton added. “Those delays and our assumptions around them are built into the forecast we published before this year.
“It’s fair to say that ISG going into administration has been a significant issue and challenge for [the expansion programme].”
The contractor was also carrying out remediation work on 23,000 cells that do not meet fire-safety requirements.
As of March 2024, a quarter of all existing prison places did not meet fire-safety standards and the MoJ aimed to make them all compliant by the end of 2027.
Amy Rees, director general and chief executive of HMPPS, said that the organisation’s exposure was greater on the maintenance side than on the new prison places ISG was building.
She said cells would close if they were not remediated by the deadline.
“[ISG] were involved, yes it will put at risk the completion by [the end of] 2027 but it won’t change the outcome, because if those places are not remediated by the end of 2027 we will take them out of action,” she told MPs.
Rees did not provide a cost estimate for the impact of ISG’s collapse on maintenance work.
Asked by committee member Sarah Olney (Lib Dem) if there was enough capacity in the contracting market to replace ISG’s roles sufficiently, Barton said he believed there were enough companies to take on its jobs.
But he added that it was “fair to say that market has its challenges, they’re not at all specific to building within the context of prisons. I think they’re quite well-reported on within the trade press”.
Rees later revealed that 183 prison places are out of use due to safety issues related to reinforced autoclaved aerated concrete (RAAC).
HMPPS is part of the MoJ.
Read More
Ian Weinfass